Wednesday, November 08, 2006

Lost money even though I got the direction right

I had a losing trade even though I got the direction right. I came up with some reasons why I lost.

Having a position too large for my comfort level in a choppy stock.

Getting in to early instead of waiting for a confirm break down of the range.

Next time I could either pass on trades like these or practice with a hundred shares until I build confidence in these trades. This is a quote from Mark Douglas's The Disciplined Trader.

Identifying the amount of risk you are comfortable with -your "risk comfort level"-and then learn how to expand it in a way that is consistent with your ability to maintain an objective perspective of market activity.

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About Me

I have been trading for 5 years. It took close to a year before I became profitable. I find that I am improving gradually each year.
My method of choice is scalping. My edge lies in tape reading NYSE stocks and staying on the side of the specialist. That is the method I learned when I started. As I build up my capital I will try new styles and trade new markets.
In late 2006 my trading hit a rough patch after the introduction of the NYSE Hybrid system. For most of 2007, I have been on a search for new strategies that would help me adapt to the market.